Wartir v Semmy [2019] PGNC 6; N7681 (6 February 2019)

	Home \| Databases \| WorldLII \| Search \| Feedback National Court of Papua New Guinea

AND:
MATHIAS SEMMY
as Assistant Manager of Rabweld Limited
First Defendant

AND:
RABWELD LIMITED, as subsidiary Company to NGIP Agmark Limited
Third Defendant

CONTRACT LAW – purported oral contract – hire of vehicle – terms of the contract – whether oral agreement vague – whether pleading supports or is consistent with the evidence - whether oral contract valid

Steven Naki v. AGC (Pacific) Ltd (2006) N5015
Woodward v. Woodward [1987] PNGLR 92

1. ANIS J: This was a trial on liability for breach of a purported hire car contract. The purported contract was oral, and it was alleged to have been entered into between the plaintiff and the first and second defendants in 2008, for the hire of the plaintiff’s vehicle, a Mazda Titan 2 tonne truck (the vehicle).

2. The trial was heard on 22 November 2018. Presentation of submissions proceeded on 4 December 2018. I reserved my decision thereafter to a date to be advised.

4. The plaintiff gave sworn evidence under oath as well as written evidence by way of an affidavit. She was the only witness in her case. The defendants called two (2) witnesses, namely, Joshua Matiha and John Nightingale. They gave sworn evidence under oath and written evidence by way of affidavits. I have marked each of the tendered evidence as exhibits, and I set them out herein:

Exhibit No.	Description	Date Filed
“P1”	Extract of Plaintiff’s ANZ Bank Statement (tendered through witness)	09/08/18
“P2”	Affidavit of Bernadette Wartir	11/05/18
“D1”	Affidavit of Joshua Matiha	15/08/13
“D2”	Affidavit of Joshua Matiha	20/11/18
“D3”	Affidavit of John Nightingale	20/11/18

5. On 7 March 2008, the plaintiff secured a loan of K36,000 from Kina Finance Limited in Lae, Morobe Province. She used the money to purchase the vehicle from Reliance Motors Limited. The registration details of the vehicle were not pleaded nor disclosed in evidence, but it was merely referred to as a Mazda Titan 2 tonne truck. The plaintiff shipped the vehicle over to Rabaul from Lae in the same year, 2008. As a start, the plaintiff operated the vehicle as a PMV. Later, the plaintiff said she let her vehicle out to the defendants to hire. She said the vehicle was used for several months by the defendants, that is, from 1 January 2009 to March of 2009. She said the vehicle broke down in April of 2009 and it was kept at the defendants’ yard. She said the vehicle was never fixed or put back on the road after that.

6. The cause of action in this case is one of breach of contract. The pleading, namely, the statement of claim, refers to a single oral agreement or contract. The plaintiff claims therein that she and the first and second defendants, had entered into a legally binding oral contract for the hire of her vehicle on or about October of 2008. However, let me also say this at this juncture. At the trial of the matter and in the plaintiff’s own evidence, she refers to two (2) oral agreements which she says were entered into in 2008 and 2009. I will explain them in detail in the latter part of my judgment. But if I may continue, the plaintiff, based on the statement of claim, sets out the material terms of the oral contract. The terms include the following. Firstly, the defendants would hire the vehicle at the rate of K250 per day, and the defendants were required to deposit K7,000 each month into the plaintiff’s account. Secondly, the defendants would be responsible for all the maintenance and repairs of the vehicle. Thirdly, the defendants shall immediately report to the plaintiff if the vehicle encounters mechanical problems. The plaintiff says that following these material terms of the oral contract, she released the vehicle on 1 January 2009. She says the vehicle was driven by the first defendant over to the yard of the third defendant. The plaintiff says that in April of 2009, the vehicle had encountered a mechanical problem and it was grounded at the third defendant’s yard. The plaintiff claims that the defendants breached the terms of the oral contract because the defendants, the plaintiff claims, had failed to report the mechanical fault of the vehicle to her. She says the defendants also breached the oral contract because they had failed to fix the vehicle when it had encountered the mechanical problem or fault. The plaintiff says the vehicle is now virtually written off.

7. The defendants deny liability. The first and second defendants no longer work for the third defendant. The first defendant resigned on 6 September 2010 and the second defendant was terminated earlier on 12 January 2010. The third and fourth defendants claim that they had only learnt of the vehicle and the arrangement, much later, that is, after they had received correspondences from the plaintiff or after they had noticed the vehicle sitting idle in their yard. They argue that the purported oral agreement itself, if it was true, which they deny, was vague and therefore cannot be enforced against them. They say the first defendant was the plaintiff’s in-law, a fact which was admitted by the plaintiff. They say that the terms of the oral agreement, if true, were odd where it purportedly required the defendants to also maintain and repair the vehicle during the term of its hire. They say the purported agreement looked suspicious. They claim that any payments that had been made by them to the plaintiff were unauthorised if they were in fact made in relation to the said purported oral contract. They say that none of the company procedures had been complied with in relation to the purported oral contract. As such, they say that they do not know of or recognise the purported oral contract as alleged by the plaintiff.

8. In my view, the issues are as follows, (i), whether the oral contract was sufficiently pleaded, and if so, (ii), whether there existed a binding agreement between the parties, and if so, (iii), what were the material terms of the contract, and if established, (iv), whether there was breach of contract.

9. Oral contracts or agreements are recognised and enforced generally under the common law in this jurisdiction. I need not give a detailed history lesson on this, except perhaps to point to the fact that the common law of England is recognised as a law in this jurisdiction. By that, I of course mean the common law of England that existed immediately before the Independence Day of Papua New Guinea, that is, 16 September 1975. Immediately before independence and pursuant to schedule 2.2 of our Constitution, the common law was adopted as part of the Underlying law of this country. It remains binding to this day to the extent or except where it is inconsistent with the Constitutional Law or a statute, or it is inapplicable or inappropriate to the circumstances of the country from time to time, or where it is inconsistent with custom.

10. Coming back to this matter, I ask myself this. What do the case authorities say on oral contracts or agreements? I have considered the case law. Let me refer to one in particular, which is the case of Steven Naki v. AGC (Pacific) Ltd (2006) N5015. Justice Cannings held on point, and I quote in part:

If a person submits that there was a contract – especially if an oral contract is relied on – the court must be able to identify the ‘who, what, when, where and would’ of the contract. That is:

· Where was the contract entered into? This is vital if the contract is oral.

11. I also refer to what the Supreme Court has held in the case, Woodward v Woodward [1987] PNGLR 92. I quote in part as follow:

(Per curiam) Where as a general rule the court will not enforce an agreement the terms of which are so vague or indefinite that the intention of the parties cannot be ascertained with reasonable certainty, nevertheless, if the court can resolve the uncertainty by reference to other acceptable evidence or the subsequent conduct of the parties it may enforce the agreement where parties have acted upon and intended the agreement to have legal effect.

Bishop & Baxter Ltd v Anglo Eastern Trading and Industrial Co Ltd [1943] All ER 598, distinguished.

12. I consider the findings in the two (2) cases referred to above relevant and I so adopt them herein.

13. The transcript of the proceeding no doubt will show confusions to a certain extent by this Court as to whether there were two oral contracts or whether there was just one, that had been entered into between the parties at the material time. As such, I think it is important that I should address that now before anything else.

14. In the statement of claim, the plaintiff refers to a single oral contract. Paragraph 8 of the statement of claim states, and I quote in part, On or about October 2008, the first and second defendants at the time were acting for the Third Defendant and entered into an oral agreement with the Plaintiff to hire the Plaintiff’s truck for doing the Third Defendant’s work. Based on this pleading, the plaintiff sets out the terms, the breaches and so forth from paragraph 9 onwards, in the statement of claim. The second set of facts was revealed at the trial when evidence were adduced. The plaintiff explained whilst giving sworn evidence (i.e., in chief, cross-examination and re-examination) that there were two oral contracts, the first one she said was entered into between herself and the first and second defendants, and the second one she said was entered into or negotiated between the plaintiff’s husband and the first and second defendants. The revelation of the two purported oral contracts is further explained or corroborated, by annexure B to Exhibit P2. The annexure consists of a letter dated 17 August 2009 by the plaintiff to the fourth defendant. The letter reads, and I quote in part:

Firstly, AGREEMENT was made verbally last year between me and Mathias/Arnold for the vehicle to be hired @ K250.00 per day which I had my own driver. This arrangement did not work out well because I asked you guys for an agreement form to be signed by us in order for me to fully know my vehicles safety guaranteed but you said, normally when Rabweld hire vehicle in the past you do not sign agreement forms. You said you only do verbal agreement and use peoples’ vehicle as long as you pay them what they invoice. I did not agree with this that is why the vehicle was only hire for about 1-2 months and I held it back last year from you people.

This year when my husband came from Lae, you guys (MATHIAS/ARNOLD & MY HUSBAND) made a new agreement again verbally for you to hire it again at the same price K250.00 per day. We again asked for agreement form but you said as usual no agreement forms to be sign.

15. To me, there seems to be a fundamental flaw or discrepancy in the pleading. Let me explain. The statement of claim pleads that it was the plaintiff that had entered into the latter oral agreement with the defendants. However, the said assertion is not supported by evidence at the trial. The plaintiff’s direct involvement with the defendants was in relation to the first purported oral agreement sometime in October of 2008. That agreement lasted, according to the plaintiff, for about 1 to 2 months. Later, the plaintiff’s husband, again and according to the plaintiff’s own evidence, had negotiated and entered into the second purported oral agreement with the defendants. It is clear now that it is the latter purported oral agreement that has been pleaded and is relied upon by the plaintiff in this proceeding. The statement of claim therefore and in my view, contradicts the evidence. This is because the statement of claim asserts that it was the plaintiff that had entered into the oral agreement that had purportedly commenced on 1 January 2009, when in fact, it was her husband. So, having clarified that, if this Court is to accept the evidence that has been deposed to by the plaintiff as accurate and reject the facts as pleaded, it would mean that the plaintiff’s husband, at the material time, had negotiated and had entered into the latter purported oral agreement. I note that the plaintiff also gave evidence in Court that her husband and her sister had negotiated the latter oral contract and that they had also provided other related assistance.

16. To me, the conclusions I have reached, are as follows. If I am to follow the plaintiff’s claim based on her statement of claim, I would find her allegation of fact where she had alleged that it was her that had entered into the oral agreement which had commenced on 1 January 2009, to be false. I say this because her own evidence in Court reveals that she was only involved in the first purported oral contract in October of 2008 which had, based on her own testimonies in Court and her letter of 17 August 2009, lasted for about a month or two before it ended. Her own evidence also reveals that the second purported oral contract was not entered into between herself and the defendants, but rather, it was purportedly entered into between her husband and the first and second defendants. These fundamental flaws, in my view, make her claim vague. On the other hand, if I am to follow the plaintiff’s claim based on her evidence, the biggest dilemma I would have is this. Since the latter oral agreement was negotiated and entered into between the plaintiff’s husband and the first and second defendants, none of her evidence would be credible because they would be regarded as hearsay. The purported contract being oral and following the requirements that are expected under law for such contracts, I also note that the three (3) persons that have allegedly negotiated the contract have not been called in to give evidence nor have they provided any written evidence before this Court. In my view, they ought to have given their evidence in Court. In this case, it seems that the plaintiff should have but has failed to ask or summon them to Court or ask them to file written evidence. As a result, none of the persons who had purportedly entered into the latter oral contract, have provided any written or sworn evidence whatsoever that would assist the Court identify the ‘who, what, when, where and would’ of the contract, as held in the case of Steven Naki v AGC (Pacific) Ltd (supra).

17. Since the defendants have denied the allegations, and since this was a purported oral contract, the plaintiff had the burden to adduce evidence, on the balance of probabilities, to set out the foundation of the claim and give evidence of a legally binding oral contract. The said burden, in my view, could not be discharged by the plaintiff because she was never physically there and she never negotiated or entered into the latter purported oral contract with the first and the second defendants. She was in no position and could not give any direct evidence as to what may have been agreed upon. Those that had purportedly negotiated the oral contract were not called in to give evidence. In the end, this Court is left with just hearsay evidence coming from the plaintiff concerning the latter purported oral agreement of 1 January 2009. I therefore cannot see how the elements of an offer, acceptance, consideration or intention to create legal relations, can be addressed or be raised for consideration by this Court. In other words, the plaintiff has failed to establish them.

18. The other problems I see with the matter concerning the vagueness argument are as follows. Firstly, there is no date pleaded or disclosed in evidence as to when the plaintiff’s husband and the first and second defendants had met to discuss and agree upon the latter purported oral agreement that had purportedly commenced on 1 January 2009. Did they meet in October, November, or in December of 2008? Or did they meet on 1 January 2009, that is, on the purported commencement date of the latter alleged contract? Secondly, the plaintiff did not plead the duration of the purported oral contract. In other words, the purported oral contract, if it had existed, had no end date to it. Thirdly, there appeared to have been changes made to the hire rate of the purported oral contract. The initial hire rate was said to be set at K250 per hour. It was later said to be increased to K500 per hour. Was the purported increase agreed to by the parties and if so, by which parties and how was that done? Was that agreed to by consensus, or was the rate increase unilaterally done? Did the oral contract have a variation clause, and if so, what does it say? Fourthly, the purported oral contract did not clearly state whether the hire was on a 24 hours basis, or whether it was for the office or official hours use only, and whether the vehicle was to be returned to the owner at 12pm every Saturday, and if so, when or what time must the vehicle be returned to the first and second defendants after the weekends? The fifth consideration is this. It was not clearly pleaded whether the third defendant or the fourth defendant would be responsible for the oral contract. Whom did the first and second defendants put down as the hiree of the vehicle? Did they agree on behalf of the third defendant? Or did they agree on behalf of the fourth defendant? This question is relevant because the plaintiff pleads that the first and second defendants, that is, the two persons who had purportedly entered into the oral contract at the material time, were employees of the third defendant.

19. Finally, I ask myself this. What about evidence of the two (2) payments that appear on the plaintiff’s extracted or joint bank statement of account, that is, as shown under exhibit P1? The statement shows record of two (2) cheque deposits made by the fourth defendant. The first cheque was deposited on 25 March 2009 for a sum of K6,292.60, and the second cheque was received on 4 June 2009 for a sum of K7,000. There is also allegation of a third payment, however, there is no confirmation that the said payment was made by the defendants, so I refuse to accept or take that into account. In my view, without any credible evidence of a valid oral contract between the plaintiff and the first and second defendants, the reasons for the deposits cannot be ascertained by this Court. I note that there is no evidence either in the said bank statement to say what the payments were for. There is also no evidence of any invoices issued by the plaintiff that was adduced at the trial that would have explained or corroborated Exhibit P1. All I have before me is record of payments of some sort by the fourth defendant to the plaintiff’s account. In my view, I cannot merely ‘connect the dots’ so to speak, without the backing of sufficient evidence. To do so would undoubtedly be speculative in my view. Therefore, this Court cannot give any credible value to what is contained in Exhibit P1. The defendants, I may add, acknowledge that cheques were or may have been drawn and deposited into the plaintiff’s accounts, but they say that they cannot see why nor explain that, and they suggest that the payments could have been done fraudulently or without proper authority coming from them.

20. In the end, I find the plaintiff’s claim to be vague as well as lacking in evidence for the Court to proceed further and deal with the other remaining issues to determine whether the defendants are liable or not.

21. I make two (2) remarks. Firstly, I note that the plaintiff did not say whether she had been paid in relation to the first purported oral agreement. Had she been paid under the first purported oral contract by the defendants, then evidence of that, had it been tendered or disclosed to the Court, would have, in my view, shed some light over the matter. Without these, it suggests to me that the first purported oral contract could have been private one between the plaintiff and the first and second defendants. The same could therefore be inferred in relation to the second purported oral agreement. My second remark is this. The plaintiff claims that she had issued monthly invoices under the purported oral contract to the defendants. However, I note that she has not attached any evidence whatsoever of these invoices in evidence to show whom the invoices were made to. Again, these would have been relevant, had they been disclosed, that is, for this Court to have a better understanding of the claim.

22. Awarding of costs in civil proceedings remains discretionary. In this case, I will order cost to follow the event. Cost will therefore be awarded in favour of the defendants on a party/party basis which may be taxed if not agreed.

___________________________________________________________
Office of the Pubic Solicitor: Lawyers for the Plaintiff
Warner Shand Lawyers Rabaul: Lawyers for the Defendants

National Court of Papua New Guinea

Wartir v Semmy [2019] PGNC 6; N7681 (6 February 2019)